Blockchain and Bonded Warehouses
As an important part of the supply chain management process, bonded warehouses are notoriously complex. They play a vital role in the compliance process within value chains. Between fulfilling the functions of entry filling, storage, security, in-bond, de-bond, inspection and customs audits, it is natural that the procedure of ensuring compliance is not always thought of as efficient.
But can we use emerging technologies to build compliance into efficient cross border trade?
Many, including Maersk, Nestle and Carrefour, have decided that blockchain is the answer. Here is how blockchain can ease the management of logistics in customs bonded warehouse operations:
Dealing with fraud and improving compliance: blockchain decentralises system management and authorisation to a network of nodes. No one individual can override the controls and tamper with the record of events. The way in which each transaction is validated makes fake receipts impossible. Blockchain therefore helps enable trustworthiness when using the services of 3rd party customs.
Not only does this prevent tampering and reduce the risk of fraud, it also allows for easier auditing and checking compliance. The very nature of blockchain’s transparent record of events means that the audit trail is built in. Transactions become automated, meaning that officials can analyse information in real time and take immediate action. There is also an accurate view of the release of shipments. Smart contract can also enable easy, automatic payments of customs duties.
This visibility means that misinterpretations by customs brokers are therefore reduced. Reconciliation issues are reduced because the visibility and immutable record of data across the network minimises the space for disputes. Whether inventory reconciliation or charges levied, time and money is saved by having all relevant information securely verified.
On top of this, free trade agreements, certificates of origin, product qualifications and permits can be issued on blockchain to establish authenticity.
The emergence of technologies such has blockchain has clearly prompted a shift in thinking when it comes to SCM. Our globalised economy has meant that all tiers of the supply chain are seeking to tidy up: supply chains are inefficient, at risk of fraud, counterfeit goods, and human rights abuses. It is no wonder many are looking at decentralised ledger technologies to build efficiency and compliance into logistics.
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